Sparse Production Networks

Andrew Bernard and Yuan Zi

No 17667, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Firm-to-firm connections in domestic and international production networks play a fundamental role in economic outcomes. Firm heterogeneity and the sparse nature of firm-to-firm connections implicitly discipline network structure. We find that a large group of well-established statistical relationships are not useful in improving our understanding of production networks. We propose an "elementary" model for production networks based on random matching and firm heterogeneity and characterize the families of statistics and data generating processes that may raise underidentification concerns in more complex models. The elementary model is a useful benchmark in developing "instructive" statistics and informing model construction and selection.

Keywords: Model selection; Firm-to-firm networks; Balls-and-bins; Buyer-seller matching; Underidentification (search for similar items in EconPapers)
JEL-codes: F11 F14 (search for similar items in EconPapers)
Date: 2022-11
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Related works:
Working Paper: Sparse production networks (2022)
Working Paper: Sparse Production Networks (2022)
Working Paper: Sparse production networks (2022)
Working Paper: Sparse Production Networks (2022)
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